- Klarna is restructuring teams and placing staff in a “talent pool” as it prepares for its US IPO.
- The company is pushing AI adoption while streamlining positions and cutting costs to become leaner.
- Employees tell BI that some changes haven’t been without their challenges.
When John was told he’d been placed in Klarna’s “talent pool” last year, he thought it meant a new opportunity within the company. Instead, it felt like a slow march toward the exit. For months, he waited, hoping to be matched with another position — an offer that never came. Eventually, Klarna offered him an exit package.
The talent pool seems like “a sneaky way of carrying out quiet layoffs,” John, who asked BI to use a pseudonym to remain anonymous in order to protect his future job prospects, told Business Insider.
John was one of hundreds of employees who have found themselves in the precarious position of being placed in the talent pool ahead of a possible IPO by Klarna. The talent pool is a group of employees whose positions were eliminated but are kept on the payroll while they search for new positions within Klarna that match their skills. If they don’t find a fit, they may be offered an exit package or choose to resign.
The Swedish fintech giant, once Europe’s most valuable startup, confidentially submitted its draft registration to the Securities and Exchange Commission in November, though it’s unclear if these plans will change with the current market volatility.
Klarna offers short-term financing to customers online and in stores at checkout in the form of split payment terms. It says it has more than 85 million customers and partnerships with over 600,000 retailers, including Apple, Adidas, and Airbnb.
As it readies itself for a potential public offering, Klarna has been shedding its startup skin and adopting the discipline of a public company — a transformation that, according to insiders, has come with growing pains.
The company has been restructuring teams, consolidating roles, and cutting costs in a bid to become leaner ahead of its public debut, according to Klarna employees past and present. Eleven current and former Klarna employees spoke to BI on the condition of anonymity to protect their future job propects.
The “talent pool”
Insiders suggest that the impending IPO and desire to be more efficient might be driving a more deliberate shift in staffing — what some people internally have described as “Klarnageddon” and a process entailing what they believe are “quiet layoffs.”
CEO Sebastian Siemiatkowski has rejected the notion that the company is conducting layoffs. In an October episode of the “Grit” podcast, he said Klarna is not laying anyone off, “it’s natural for people to leave, and that the company simply “stopped hiring due to AI,” which, combined with a natural attrition rate of 20%, was leading to a smaller workforce.
In a January X post about Klarna’s working practices, Siemiatkowski likened the way employees are given positions to a “consultant being staffed to a project.” He added, “The closing of a team or position normally leads to a quick reassignment within weeks. and is NOT a job loss.”
Employees say the reality is different, and Siemiatkowski’s narrative of natural attrition and gains from AI doesn’t fully align with their experiences.
Ten of the people BI spoke to said they believed the “talent pool” is part of a strategy to reduce headcount. Four people who were placed in the talent pool after their positions were eliminated describe this approach as being placed in limbo, waiting for a reassignment that might not materialize.
An internal document seen by BI, last updated in August, indicated that around 260 employees — roughly 7% of the workforce — were in the talent pool at the time.
Klarna said the number of employees between assignments in August was significantly lower than 260 and has remained so since. It added that the majority of employees in the talent pool are on long-term leave, such as parental leave or between assignments.
Klarna also said last year more than 800 people were matched to a new position from the pool and that individuals in the talent pool are matched with open positions every week. However, the company did not respond to BI’s questions about how many employees in total were in the talent pool throughout 2024 and how many of them were not offered another position within the company.
From hypergrowth to leaner operations
Klarna’s road to a possible IPO is a stark contrast to its pandemic-era boom. In 2021, the company reached a $45.6 billion valuation, went on a hiring spree, and expanded aggressively in the US. Klarna’s headcount steadily grew between 2019 to 2022, when it hit a peak of 5,441 employees, according to its 2022 annual report. However, a broader market downturn in 2022 slashed Klarna’s valuation to $6.7 billion, leading to 800 layoffs.
Now, Klarna is recalibrating. In the past six months or so, it has reorganized divisions, including the engineering team, and more recently restructured its analytics division and formed a new “Product Insights” team. An internal document from October seen by BI revealed that for the 120 employees seeking roles in this new team, only 70 positions were available, leaving a surplus of 50 workers likely to be placed in the talent pool.
Some Klarna employees have voiced their frustration over the changes. In an October internal meeting with CFO Niclas Neglen, a recording of which was obtained by BI, one worker asked if leadership had considered the toll of “constant” restructuring on mental health. Another person asked in the comments section of the virtual meeting if the reorganization could “have been done more humanely and fairly.” Neglen acknowledged the concern about the impact on employees’ mental health but responded, “change is healthy.”
The company also scrapped its annual “Smoooth Week” event for 2024, which used to bring all employees to its Stockholm headquarters. It’s unclear whether this decision was related to cost-cutting. Klarna said it communicated internally that Smoooth Week will happen within an interval of two to three years.
Bullish on AI and cost-cutting measures
Throughout 2024, Siemiatkowski made bullish statements about how Klarna is using AI. In February of that year , the company made headlines after announcing that its AI customer service agents had been doing the equivalent work of 700 full-time human employees.
Initially, Klarna’s AI efforts began with an in-house chatbot “Kiki” to summarize and answer questions based on internal documents, four people said. It has since expanded to other departments, such as using AI-generated imagery for marketing campaigns. In May, Klarna attributed some cost savings in the first quarter to AI. It said it cut its sales and marketing expenditure by 11% in that period and that “AI is responsible for 37% of the cost savings, or about $10 million on an annualized basis.”
The company has an agreement with OpenAI to use its AI models and Siemiatkowski has actively encouraged staff to use AI in their daily work. In September, Siemiatkowski posted on Slack instructing employees to use OpenAI’s o1 model. In the post, seen by BI, he said, “Dear AI nerds!!!! PLEASE Go and checkout the new OpenAI o1 model immediately!! Make sure you try it on at least one task and idea during your Friday work time!!!”
Engineers are using Microsoft’s AI-powered coding tool, GitHub Copilot. Four engineers told BI it is mostly a support tool for troubleshooting and that it can be frustrating to use for coding because it can remove or add random brackets or commas, so they have to review the code base manually.
One former employee described Klarna’s internal use of AI as “nice and sexy to show in the press,” and another current employee said he uses it to draft text and brainstorm ideas, which he believes has made him a more efficient worker.
Klarna has also cut costs by reducing its reliance on external software. A specialized cost-cutting team — known internally as “The Terminator” — has been eliminating SaaS tools. In a November all-hands meeting, which BI obtained a recording of, Siemiatkowski celebrated the removal of more than 30 SaaS systems and set his sights on the next target: “Fuck Jira, fuck Confluence,” he said, referring to Australian software firm Atlassian’s products.
In an X post earlier this month, Siemiatkowski said Klarna estimates that it has “shut down” about 1,200 software as a service providers to help consolidate how it stores knowledge.
New compliance and communication measures
Klarna has also been tightening its internal controls, a common step before going public. Klarna’s director of people and HR, Mikaela Mijatovic, told employees in a Slack post in December that it would begin testing employees in Sweden for alcohol and drugs, starting in January. Mijatovic said the move was “part of a larger effort to strengthen security across Klarna.”
In a September all-hands meeting, a recording of which was obtained by BI, Siemiatkowski told employees the company would likely need to introduce new compliance measures, including tracking employee locations. He said for senior staffers, it could mean seeing their financial statements to “assess if someone is in trouble or could be compromised.”
The company has also made changes to the way it wants employees to communicate internally. In May, Klarna’s communications director, Johanna Nyman, instructed employees via Slack to avoid using direct messages for important discussions, instead favoring public team channels and internal wikis. The post was met with some resistance — 56 employees reacted with a thumbs-down emoji, according to screenshots viewed by BI.
The company’s approach to internal meetings has also shifted. Recurring one-on-one meetings between managers and employees were scrapped in September, a move that some workers say has deprived them of a crucial space to discuss challenges.
Klarna has also been exploring ways of expanding beyond its core payments business. It recently internally advertised four jobs to help build a product that lets customers buy and sell stocks through its app. Siemiatkowski said in an X post last month that Klarna “will embrace crypto” going forward.
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